Here’s a fascinating, mostly overlooked little article — Mutual Funds Opt to Liquidate[1] in Wednesday’s NYT. It almost indirectly showcases the effects of Darwinism in finance:

Some of the nation’s more than 8,000 mutual funds are shutting their doors, as their managers confront a lackluster stock market, greater regulatory scrutiny and higher costs.

Yesterday, the WWW Internet Fund, set up in 1996 to capitalize on the Internet boom, the first mutual fund to do so, said its board had decided to liquidate the fund and two affiliated funds, Growth Flex and Market Opportunities. The announcement came nearly two weeks after managers of the Oakmark Small Cap Fund announced that it would be closing.

“We’re sitting here with $10 million in assets and three years of losses,” said Lawrence York, manager of the WWW Internet Fund. The funds’ assets peaked at $150 million at the height of the Internet bubble, Mr. Lawrence said, and have since been shrinking because of disastrous performance. The WWW Internet Fund lost 57 percent, 52 percent and 49 percent in 2000 through 2002, respectively, according to Morningstar. It rebounded in 2003 to return more than 70 percent, but is down again this year, 12 percent through July.

Watch the bulls&*#: “The board questioned “whether it was in the best interest of shareholders” to keep the funds going, Mr. York said. With assets shrinking, the costs of running the funds had escalated, since there was less capital over which to spread expenses. The WWW Internet fund has an expense ratio of 5.5 percent of assets, according to Morningstar.”

Best interest of the S/Hs? Don’t make me laugh! That’s merely a polite way to say –”Hey, we’re losing money on this goddamned thing. Close the f#$@er down!”

Here’s some more giggles: “It’s refreshing to see a board do the right thing,” said Russel Kinnel, director of fund research at Morningstar, adding that it was rare for mutual fund boards to shut a fund voluntarily. “It may be another sign that Eliot Spitzer’s campaign is having an effect.”

Hell, if they do the right thing –even of its for the wrong reasons — I guess its better than doing the wrong thing . . .